The Howle of the Auditor

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Gov. Jerry Brown recently asked the state auditor, Elaine M. Howle, for 10 specific budget-saving suggestions that he could enact himself, preferably by executive order. This week, Howle replied -- and, quite deliciously, gave him more than he bargained for.

It wasn't merely that Howle gave him 14 suggestions more than just 10. And the first 13 suggestions, while thoughtful, weren't particularly remarkable, from adjusting fines and penalties that haven't kept up with inflation, to changing procurement and laws that govern pay of certain kinds of employees.

No, it was the 14th and final recommendation Howle provided that constituted her howl at the budget status quo: Change the constitution to get rid of the requirement of a 2/3 vote of the legislature to raise taxes.

Whether it was Howle's intention or not, this recommendation provided commentary on California's budget system -- and on Brown's request. The reason why Brown is asking Howle (and other parts of the state government) for budget saving ideas is that such ideas will save enough money to change the budget picture. They won't. No, Brown is doing the asking to show that he's serious about cutting spending -- and help him build enough credibility that he can convince 2/3 of the legislature (including four Republicans ) to go along with his tax extensions.

The way I read Howle's letter, she seemed to be saying: hey, buddy, you could save small amounts of money in these 13 ways, but why not just change the budget system that has you so stuck?

Good question. I've included the text of Howle's 14th suggestion below:

"RECOMMENDATION
Work with the Legislature to place a Constitutional Amendment on the ballot that lowers the vote-
threshold for increasing taxes to a majority vote or some other form of super-majority vote, such as a 55 percent requirement.

State Auditor’s Work Supporting This Recommendation
State law authorizes the State Auditor’ Office to issue reports on state agencies or statewide issue areas that are at high risk for the potential of waste, fraud, abuse, and mismanagement or that has major challenges associated with its economy, efficiency, or effectiveness. In 2009 we added California’s budget process to the list of state agencies and issue areas that are at high risk. In our February 2009 report titled High Risk: The California State Auditor Has Designated the State Budget as a High-Risk Area (Report 2008-603), we describe the various constraints on the State’s General Fund and the difficulty lawmakers have balancing the budget each year simply by reducing expenditures to the level of estimated revenues. We concluded that given the long-term imbalance between the General Fund’s revenues and expenditures that the State has experienced, decision makers will need to consider some sort of broad-based tax increase to bring revenues in line with expenditures. However, given the two- thirds vote requirement for taxes, lawmakers have difficulty passing any increases.

Potential Benefit
Lowering the vote threshold would benefit the State in several ways. First, the Legislature will more
likely meet the constitutional deadline for passing the budget, which would ensure that those
dependent on state revenues, such as local government and vendors, receive funds in a timely manner. It also would eliminate the need for costly loans and the costs associated with extended legislative sessions. Finally, the consistent failure to pass a budget on time has affected California’s credit rating. This results in less favorable interest rates on loans and bonds, which in turn increases debt service costs for the State.

Action Needed
This recommendation requires a change to the California Constitution."